Once Again: The Sky Is Rising When It Comes To Creative Output

from the why-so-much-doom-and-gloom? dept

A few years ago, we released our Sky is Rising report, looking at the state of the global entertainment industry, in which we found that, contrary to the story of gloom and doom that was being spread by some special interests, the real story was quite exciting. What we found when we looked at the actual numbers was that we are in a true renaissance of creativity, with massively more content — video, movies, books, music and video games — being produced these days than ever before. Perhaps more importantly, we saw that the amount of money being spent on these things also continued to increase — though it didn’t always flow through the same channels as in the past. This combination of factors — more content producers, many new channels — often led some people to insist that the industry was collapsing, rather than the truth, that it was growing rapidly, just in more distributed ways. That represented certain challenges for many people in the creative industries — but from a public policy standpoint, it certainly suggested that things were pretty good — not deathly bad, as was often implied. Last year, we came out with a follow up report that focused on Europe — noting a similar pattern in various European countries, though with some countries facing unique and interesting challenges. However, one interesting aspect of that report was that we saw a stronger pattern of success in those areas where innovation was allowed to thrive and flourish, rather than be held back.

Today we’re launching the third report in this series, The Sky is Rising, 2014 Edition, focused on the United States in particular. And, once again, we see the same basic story. Lots of growth. Tons more content being produced. Lots of stories of new business models and artists connecting with their fans in new and unique ways. We’re seeing new markets develop, along with new tools to help those markets. But the key story is the same as always: there is more content being produced today than ever before, and it’s helped along by innovative technology, as the two often go hand in hand. More content than ever before is being produced, and content creators have more new and powerful ways to create, to distribute, to build a fan base, to connect and to build a business model — and that’s quite exciting.

At the same time, there’s a push underway to reform our copyright laws — something that we agree needs reform. And, yet, strangely, much of the rhetoric around reform has been based on the idea that the content world is suffering, or that there’s some sort of “Hollywood vs. Silicon Valley” battle going on. The actual evidence suggests no such thing at all. Rather, it suggests that when innovation is allowed to flourish nearly everyone benefits. More content creators are able to do much more and create much more content. More fans are able to experience and consume much more content while supporting content creators in new and unique ways. From a public policy standpoint, it seems like things have been trending in the right way for a long time. If there’s to be any sort of public policy change it should be to try to speed up that process, rather than to slow it down.

You can read the full report below. Once again, as with the previous editions of this report, we’d like to thank CCIA for sponsoring and publishing the paper.

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Comments on “Once Again: The Sky Is Rising When It Comes To Creative Output”

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John Fenderson (profile) says:

Re: Re:

I suspect what Mike was trying to say is that silicon valley did not instigate a battle with Hollywood. Hollywood absolutely declared war on both the tech crowd and society at large (while claiming it was the other way around) and has been attacking them viciously ever since. Tech, for a long while, never even responded. Now, we’re seeing them engage in some weak attempts at defending themselves.

Lonyo (profile) says:

Revenues revenues... profit?

While most reports are somewhat constrained due to the available information etc, it seems (based on my brief reading through) that the focus on revenues is to the point that profit or margins are effectively ignored.

Now, looking at revenues is fine, however the argument should also be that you don’t NEED an increase in revenues to show health.
You point out that digital sales are growing in all areas. These are close to zero marginal cost products. That means every digital sale is nearly pure profit (after retailer margins), while physical sales have a cost of goods, etc.

Flat revenues with a declining cost base would result in more profit in the industries. Growing revenues AND a declining cost base just means that there’s way more money floating through. Of course, the people who really suffer are the manufacturing bases, such as physical disc manufacturers and retailers, not Hollywood or the content creators.

There is so much focus on revenues and barely anyone mentions the fact that digital is close to zero marginal cost and nearly pure profit, and that the digital/physical mix should be increasing profits naturally, even if revenues don’t increase. And, as Amazon would hopefully tell people, profits are quite important, revenue isn’t everything. Amazon has massive revenues but about zero profits.

Anon says:

Let Freedon Ring

the point is that silicon has freed artists from the traditional channels. Online allows revenue streams that bypass traditional distribution, while technology allows small groups and individual amateurs to produce results as polished as the big providers themselves.

This started obviously with audio – digital recording and processing has allowed the small professional to produce studio quality albums without a massive investment in technical equipment; this has been the case for two decades or more. Modern digital synthesis means you don’t need to buy or rent an orchestra full of instruments to produce your own music. A cheap keyboard and a computer can substitute for guitar, drums, horns, whatever.

Cat videos may be a staple of YouTube, but more and more amateur productions find their way onto the service; I read a report recently on how many hundreds of millions the ad system has paid for this content. Amazon now allows the author to by pass the publishing houses and self-publish eBooks; formatted with easily available software. It’s only a matter of time before anyone with a smatter of time an talent will be able to take a digital animation tool like Blender, dress a virtual set with freely-available models of whatever props are needed, and walk their virtual actors through any movie they want. Kits allow the construction of games for anyone with imagination.

Heck, even popular blogs are a passable substitute for the filtering process that editors and big content originally provided. Word of “mouth” like twitter can make a product go viral the way radio stations used to generate the buzz to make hit songs.

It’s a brave new world, and the dinosaurs need to adapt or else…

Anon says:

An Example...

An example of the Brave New World is the extremely tacky video “Friday” by Rebecca Black. Never mind the artistic issues… It was taken down over disputes about copyright. This was not a vanity issue – apparently the virality(?) of the video generated tens of thousands to hundreds of thousands in associated ad revenue. That’s what the fight was about. (ask the guys who had to write the songs for “Spinal Tap”. It takes talent or real luck to be just bad enough that it’s funny, not pathetic…)

Now consider – even in the heyday of MTV, how many groups made $100,000 off a video that probably took $5,000 or less to make? How many unknown rank amateurs did so? This is the brave new world, where anything is possible.

That One Guy (profile) says:

The key word: 'Nearly'

Rather, it suggests that when innovation is allowed to flourish nearly everyone benefits.

Nearly‘ everyone benefits, but those that are used to placing themselves, like it or not, between the creators and fans, throwing up a toll-booth for ‘their’ cut, are suddenly finding out that more and more, people don’t need them.

Why hand over the rights, and most of the profits, for your music when you can just self-publish on a service that gives you the majority of the profits and lets you keep the rights to your works?

Why hand over the rights to your stories/books, when you can self-publish on a service that lets you keep the rights to your creation, along with most of the profits?

The days of the parasite gatekeepers are coming to a close, but they are going to be fighting tooth and nail to keep the control, and money, that they have grown accustomed to, because the alternative, giving up that control, giving up those profits, and either becoming enablers rather than gatekeepers, or going out of business? That’s completely inconceivable to them.

Anonymous Coward says:

Those eye-rolling 'off the cuff' statements

The Sky is Rising is a fine piece of work, and I completely agree with the major points being made. However, it also contains many off the cuff statements that not only show a lack of knowledge of the subject, but can easily be debunked by a few simple Google searches. This results in a somewhat amateurish quality of an otherwise excellent article.

An example from the PDF:

“Video games were once expensive, standalone machines. Video arcade systems that consumed players’ coins were relatively quickly replaced by home console systems that offered comparable (and now superior) graphics.”

The reality was that both arcade games and home video games came out at almost exactly the same time in the early 1970s and coexisted together for many years. Graphics of both types of systems were for the most part comparable (and in the case of early games like Pong, identical) with one glaring exception, the Atari 2600, which was literally a stone-age relic throughout most of it’s decade-plus sales run. In Japan, coin-operated arcade games never went out of fashion, and are still as popular as ever.

John Fenderson (profile) says:

Re: Those eye-rolling 'off the cuff' statements

“The reality was that both arcade games and home video games came out at almost exactly the same time in the early 1970s and coexisted together for many years.”

Yes, indeed, your history is accurate. The very first commercial arcade video game came out in 1971 (Computer Space, by Nutting Associates). The very first home console video game came out in 1972 (the Magnavox Odyssey — the prototype of which is in the Smithsonian).

I love that bit of trivia, because most people assume that the first of each category was Atari’s Pong, but it’s not so. The arcade version of Pong was 1972, and the home version was 1974 — although the Odyssey had the very first Pong — Acorn, the engineer who developed Atari’s Pong, says Bushnell cribbed it from the Odyssey’s Pong, but Bushnell said he cribbed it from a Pong program the existed for the PDP-1 in 1964.

Yes, I’m a computer history geek.

Ninja (profile) says:

Re: Those eye-rolling 'off the cuff' statements

Well, yes, arcades still exist but let’s be honest, aside from Japan and some of us, why would I go to an arcade when I have a myriad of games that are generally better in the visuals than their arcade competition and won’t cost me every time I fail? Also, Arcades cannot provide a full, several-hour experience like some console games can. I’d say that the paper tries to show how consoles got cheaper and massified (is there such a word?) which ended up bringing much more revenue than arcades could ever do. I could be wrong of course.

John Fenderson (profile) says:

Re: Re: Those eye-rolling 'off the cuff' statements

There are several arcades near me that do very good business. They’re always packed. The appeal is a simple one, I think — it’s the social experience. People go there to hang with their friends, play games together and generally have a great time in a face-to-face setting. (Also, they all have a full bar!)

The quality of the visuals is irrelevant (as it should be: the important thing isn’t how pretty a game is but how good the gameplay is — something that much of the game industry seems to have forgotten years ago). Also, you wouldn’t want arcades to provide full, several-hour experiences. That would be antithetical to their main appeal.

It seems to me that arcade games and the type of game your talking about are addressing two totally different audiences. Arcades are primarily social experiences, console games (even online multiplayer ones) are not.

Mike Masnick (profile) says:

Re: Re:

Given that content creation is asserted in the article to be flourishing, it is hard to accept at face value that copyright is crushing the creation of content.

False comparison.

We have never said that copyright is crushing content creation, rather that it often hinders innovation and forms of free speech that are important for cultural purposes.

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